Economist Accuses Trump Tariffs Of 'Wrecking The World Economy', Predicts Ways In Which China Will Retaliate

American Economist Jeffrey D. Sachs cautioned that the United States is likely once more steering the global economy toward catastrophe — signaled by last week’s staggering two-day, $10 trillion market-value drop.

What Happened: "If something wipes out $10 trillion of Market CapEx in two days, you're probably on the wrong track. The United States is on the path of wrecking the world economy once again," said Sachs in a recent conversation with CNBC-TV18’s Shereen Bhan.

Sachs said it would be America's third major misstep, linking President Donald Trump's tariff policies to the 1930 Smoot-Hawley tariffs and the 2008 financial meltdown. "He is singlehandedly wrecking the world economy, and I think the damage is going to be done before it gets undone," he said, criticizing the administration's approach as born of "the fervid imagination of one person."

He argued that "long made value chains, supply chains for critical commodities… are being profoundly disrupted," noting that global markets are responding with uncertainty. Sachs also pointed to growing anxiety among business leaders who had expected a "business friendly administration" but now face lost confidence and potential recession.

See also: EU Threatens Additional Taxes On US Tech Giants Amid Ongoing Tariff War: ‘We Are Developing Retaliatory Measures’, Says Von der Leyen

Turning to China, Sachs stated that Beijing has been decreasing its dollar holdings for years and suggested that "the world’s going to need alternative ways to make payments" given Washington's "weaponization of the dollar." He further noted that this standoff could push China toward "a more leadership role," both in currency reforms and in strengthening ties within the BRICS alliance.

Why It Matters: These latest observations come on the heels of similar warnings from business leaders like Peter Thiel, who has urged an overhaul of U.S.-China relations, and Peter Schiff, who took to social media to predict a financial crisis even more severe than the 2008 recession.

Others are sounding alarm bells, too. Ray Dalio, the founder of Bridgewater Associates who has a proven track record of accurately forecasting financial disasters, expressed concern about a potential economic crisis in an interview on Sunday.

An increasing number of market experts now see rising chances of a recession hitting the U.S. economy, citing upcoming tariff impacts, declining consumer sentiment, and spending cuts by the new administration.

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